Heated moment Waleed Aly clashes with coalition senator who promises to undo Anthony Albanese's Phase 3 tax cuts if elected

WAleed Aly has clashed with a Nationals senator over the Coalition's promise to undo the government's controversial phase three tax plan.

Prime Minister Anthony Albanese promised at least 36 times during the election that he would make no changes to the statutory cuts introduced by the Morrison government.

But on Wednesday afternoon, Labor MPs gave their unanimous support to a decision to halve the benefit for Australians earning more than $180,000, in favor of a boost for lower earners earning less than $150,000.

Senator Bridget McKenzie slammed the government for its broken election promise when she appeared on The Project on Wednesday night, but the show's host fired back.

“Your Liberal partners have promised to reverse the changes. Undo any changes Labor makes if you are elected at the next election,” Aly said.

“That would mean eliminating the extra tax cut that everyone gets if they earn less than $150,000.

“Are you really going to the next election with a tax increase on everyone under $150,000?”

Senator McKenzie responded by claiming that taxes “will always go down under a Liberal National Coalition, we know that.”

“It's not just rents and mortgages for food, groceries, petrol that have gone through the roof under Labour, our taxes have also risen by 27 per cent in the last 18 months,” she said.

“I can absolutely guarantee that we will not adopt high-tax policies at the next election.”

Then Mr. Aly interjected and said, “That's not my question, though.”

According to leaked details of the plan, which will be presented on Thursday when Mr Albanese addresses the press club, Labor will cut the tax rate for people earning between $19,000 and $45,000 from 19 percent to 16 percent.

The revised plan aims to give those earning $45,000 a year an extra $932 a year.

Part-time and very low-paid workers are expected to earn up to $19,000 annually tax-free, up from $18,200.

That's worth up to an additional $152 per year for those with an income of $19,000 per year.

The marginal tax rate of 32.5 cents is expected to be reduced to 30 cents and the tax bracket for middle-income workers will be increased from $120,000 to $135,000, according to Cabinet leaks.

Those earning $120,000 per year will now be better off by $2,807 per year, while those earning $135,000 will benefit by a total of $3,857 per year.

Senator McKenzie was constantly asked if the Coalition would go into the next election and dump tax cuts on those under $150,000

Mr Albanese will justify his decision to help low and middle income earners at the expense of wealthier Australians in his speech to the Press Club, selling it as a 'tax cut for all' that will benefit all taxpayers.

“This is a plan for Central Australia that will deliver benefits to every Australian taxpayer, both up and down the income ladder,” he will say.

As he braces for further pressure over Labour's decision, Mr Albanese will justify the major overhaul by saying: 'If economic conditions change, changing your policies is the right thing to do. That's what we do'.

Last year, Mr Albanese and Treasurer Jim Chalmers tasked senior officials at the Treasury and Treasury to explore options for cost-of-living relief for Australians.

In his speech, Albanese will cite this advice, explaining that the positive economic prospects of almost five years ago “have not materialized.”

“This is the right decision, for the right reasons and we made it the right way,” he will say.

“It's the best way forward because it's the best way to help Australians struggling with their cost of living without putting pressure on inflation.”

Senior Coalition figures have stated they will 'fight' the new legislation in parliament and 'absolutely' reverse it if they return to power at the next election.

Shadow Treasurer Angus Taylor said on Tuesday that the Coalition's original tax plan was something with bipartisan support that had been put to the electorate twice.

“This is something that the Prime Minister and the Treasurer have committed to more than a hundred times,” Taylor said.

“It's in the legislation and Labor voted for it. And there have been two elections. So this is not something you change.'

The former coalition government drafted the legislation before the Covid pandemic and the current cost of living crisis, and it was due to come into force on July 1.

The original plan provided no tax cuts at all for those making less than $45,000, and only gave those making $60,000 an extra $375 per year.

High earners bringing in more than $180,000 a year were eligible for a huge tax cut of $9,075, but that has been cut by almost half during the Prime Minister's reform.